Stock a Has an Expected Return of 17

question 55

Multiple Choice

Stock A has an expected return of 17.8 percent,and Stock B has an expected return of 9.6 percent.However,the risk of Stock A as measured by its variance is 3 times that of Stock B.If the two stocks are combined equally in a portfolio,what would be the portfolio's expected return?

• A)13.37 percent
• B)13.70 percent
• C)15.75 percent
• D)12.41 percent
• E)14.55 percent

---

Definitions:

Raw Materials

Any materials that go into the final product.

Production Schedule

A timeline that outlines the specific tasks, operations, and timelines for producing goods within a manufacturing process.

Budgeted Selling Price

An estimated amount for which a product is expected to be sold, determined during the budgeting process.

Budgeted Unit Sales

The number of units a company anticipates selling in a future period as outlined in its budget.